AUSTIN, TEXAS, Sept. 20, 2011 – The Electric Reliability Council of Texas (ERCOT) Board of Directors today endorsed and deemed “critical to reliability” a 345-kilovolt (kV) transmission project proposed by Electric Transmission Texas LLC (ETT) from the Laredo area into the Lower Rio Grande Valley. ETT is a joint venture between subsidiaries of American Electric Power (NYSE: AEP) and MidAmerican Energy Holdings Company.
ETT’s proposed transmission project includes construction of approximately 163 miles of 345-kV transmission lines that will connect ETT’s Lobo Substation near Laredo with substations north of Edinburg. The cost of the project is estimated at approximately $300 million. The ERCOT board recommendation also endorsed the need for AEP Texas to reconductor two existing 345-kv lines and upgrade substation facilities at an additional anticipated cost of $225 million.
“The endorsement from the ERCOT board clearly establishes the need for this transmission project and paves the way for a Certificate of Convenience and Necessity (CCN) application from the Public Utility Commission of Texas (PUCT),” said ETT President Calvin Crowder. “Currently, there are only two 345-kV transmission lines serving the Valley. Both of the existing lines import power from the Corpus Christi area and run parallel to the Gulf Coast, which means both are vulnerable to hurricanes and other severe weather. The import capacity of these lines is limited, and the ability to schedule maintenance often can be a problem.”
The need for transmission improvements was reinforced during the February rolling outages throughout the state. On the morning of Feb. 2, ERCOT called for firm load to be shed across the grid. The AEP Texas share of the load shed was 380 MW. After the resumption of normal activities, the Valley continued to face the possibility of outages due to severe weather. On the evening of Feb. 3, AEP Texas shed 300 MW of load in the Valley as a result of the loss of a generator and transmission import limitations.
Construction of the line also should further improve transmission reliability in the Laredo area.
ETT anticipates filing a CCN application from the PUCT in 2012 with completion of the project envisioned for 2016. ETT will develop potential routes and conduct environmental studies prior to scheduling open houses to discuss the project with landowners.
ETT acquires, constructs, owns and operates transmission facilities within the ERCOT, primarily in and around the AEP Texas Central Company and AEP Texas North Company service territories.
AEP, headquartered in Columbus, Ohio, is one of the largest electric utilities in the U.S., delivering electricity to more than 5 million consumers in 11 states. AEP (www.aep.com) has extensive experience building extra-high-voltage 765-kV transmission lines and owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes 2,100 miles of 765-kV transmission lines, more than all other U.S. transmission systems combined.
MidAmerican Energy Holdings Company (www.midamerican.com), based in Des Moines, Iowa, is a global provider of energy services to more than 6.9 million customers worldwide. MidAmerican Energy Holdings Company subsidiaries, PacifiCorp and MidAmerican Energy Company, own and operate more than 18,000 miles of electric transmission lines.
This report made by American Electric Power and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: the economic climate and growth in, or contraction within, AEP’s service territory and changes in market demand and demographic patterns; inflationary or deflationary interest rate trends; volatility in the financial markets, particularly developments affecting the availability of capital on reasonable terms and developments impairing AEP’s ability to finance new capital projects and refinance existing debt at attractive rates; the availability and cost of funds to finance working capital and capital needs, particularly during periods when the time lag between incurring costs and recovery is long and the costs are material; electric load and customer growth; weather conditions, including storms, and AEP’s ability to recover significant storm restoration costs through applicable rate mechanisms; available sources and costs of, and transportation for, fuels and the creditworthiness and performance of fuel suppliers and transporters; availability of necessary generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover Indiana Michigan Power’s Donald C. Cook Nuclear Plant Unit 1 restoration costs through warranty, insurance and the regulatory process; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity, including the Turk Plant, and transmission line facilities (including the ability to obtain any necessary regulatory approvals and permits) when needed at acceptable prices and terms and to recover those costs (including the costs of projects that are cancelled) through applicable rate cases or competitive rates; new legislation, litigation and government regulation, including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances or additional regulation of fly ash and similar combustion products that could impact the continued operation and cost recovery of AEP’s plants; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery of new investments in generation, distribution and transmission service and environmental compliance); resolution of litigation (including AEP’s dispute with Bank of America); AEP’s ability to constrain operation and maintenance costs; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas, coal, nuclear fuel and other energy-related commodities; changes in utility regulation, including the implementation of electric security plans and related regulation in Ohio and the allocation of costs within regional transmission organizations, including PJM and SPP; accounting pronouncements periodically issued by accounting standard-setting bodies; the impact of volatility in the capital markets on the value of the investments held by AEP’s pension, other postretirement benefit plans and nuclear decommissioning trust and the impact on future funding requirements; prices and demand for power that AEP generates and sells at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; and other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.